Tandem Diabetes Care, Inc. (TNDM) CEO John Sheridan on Q2 2019 Results - Earnings Call Transcript

Aug. 02, 2019 12:38 AM ETTandem Diabetes Care, Inc. (TNDM)1 Comment
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Tandem Diabetes Care, Inc. (NASDAQ:TNDM) Q2 2019 Earnings Conference Call August 1, 2019 4:30 PM ET

Company Participants

Susan Morrison - Chief Administrative Officer

Kim Blickenstaff - Executive Chairman

John Sheridan - President and Chief Executive Officer

Brian Hansen - Chief Commercial Officer

Leigh Vosseller - Chief Financial Officer

Conference Call Participants

Joanne Wuensch - BMO Capital Markets

Alexander Nowak - Craig-Hallum Capital Group LLC

Brooks O’Neil - Lake Street Capital Markets LLC

J.P. McKim - Piper Jaffray

Travis Steed - Bank of America Merrill Lynch

Matthew Blackman - Stifel Financial Corp.

Ryan Blicker - Cowen and Company

Jeffrey Johnson - Robert W. Baird & Co.

Steven Lichtman - Oppenheimer & Co. Inc.

Matthew Taylor - UBS Group AG

Ravi Misra - Berenberg Capital Markets

Danielle Antalffy - SVB Leerink

Operator

Good day, ladies and gentlemen, and thank you for your patience. Welcome to Tandem’s Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference may be recorded. I would now like to turn the call over to your host, EVP and Chief Administrative Officer, Susan Morrison. You may begin.

Susan Morrison

Thank you, Latif [ph]. Good afternoon, everyone, and thanks for joining Tandem’s Second Quarter 2019 Earnings Call. Today’s discussion will include forward-looking statements. These statements reflect management’s expectations about future events, product development timelines and financial performance and operating plans and speak only as of today’s date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the Risk Factors portion and elsewhere in our most recent annual report on Form 10-K, quarterly report on Form 10-Q, and in our other SEC filings.

We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or other factors. In addition, today’s discussion will include references to adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is a key measure used by us to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital. Please refer to the Investor Center portion of our website for further information.

Today’s call participants include: Kim Blickenstaff, our Executive Chairman; John Sheridan, our President and CEO; Brian Hansen, our EVP and Chief Commercial Officer; and Leigh Vosseller, our EVP and Chief Financial Officer. Following our prepared remarks, we’ll open up the call for questions. Thanks everyone in advance for limiting yourself to two questions, getting back into the queue.

With that, I’ll turn the call over to Kim.

Kim Blickenstaff

Thanks, Susan, and welcome everyone to today’s call. Q2 was another quarter of record highs and milestone achievements, it’s a result of our entire organization maintaining focus and executing at extremely high level. We’ve seen strong positive momentum, which positions us for an exciting back half of this year and beyond. In addition to preparing for continued to grow, our team has also been focusing on our longer-term strategic planning. We make great progress in advancing diabetes technology and position to continue addressing the primary challenges of our industry this is still remain. These include the burden of managing diabetes, which is improved with offerings like Basal-IQ technology, but continues to be significant for people with diabetes. Healthcare providers are struggling to keep up with patients’ volumes and care demands, and risk bearing entities such as the payors are focused on transitioning care to a least cost selling.

As a result, patient care is evolving and we have Tandem are evolving. Overall, we are working to provide to aid in therapy management with the singular focus on diabetes, and are beginning to deliver system that have designed to be simply use and improved patient outcomes. Pump innovation and leadership remain fundamental to our success and providing the world’s best insulin delivery system and number one customer support will remain our goals along with our commitment to continues innovation.

We also recognized the value of enabling an ecosystem of best-in-class partners around our devices, and Dexcom CGM is a great example of this. In addition, we believe that thoughtful expansion of our data capture and analysis platforms will drive further insights and solutions for all of our customers, which includes patients, providers and payors. Overall, we are working deepen our customer engagements and our focus is to deliver solutions not just technology. We held our Analyst Day nearly a year-ago, we shared some of this vision for our company. We also discussed that in addition to our strong short-term momentum, we also have a solid long-term growth trajectory.

Today’s results are evidence that we’re delivering on the short-term momentum ahead of our prior expectations. In fact, the three to five year targets we laid out incredibly it looks more like this should have been two to three year targets. For this performance and following our strategic planning efforts, I believe, we are at strongest position of our company’s history to achieve meaningful longer term growth. We remain committed to continuing to execute in the high level and achieving the goals that we support our company and support of the diabetes community.

With that, I’ll turn it over to John.

John Sheridan

Thanks, Kim. As we’ve been working on our longer term strategy something I’ve been particularly proud of is the team’s unwavering dedication to our mission to improve the lives of people with diabetes, relentless innovation and revolutionary customer experience, is this focus that is driving our successful execution today. We are very proud of nearly 100,000 people now use a Tandem insulin pump in the United States. In addition, we’ve launched in 12 new countries in the past year and we’ve now shipped nearly 18,000 pumps outside of the United States.

Our results in the second quarter that contributed to these numbers are particularly impressive our domestic shipments were in line with what we’ve achieved in our seasonally high fourth quarter last year, and we’ve already shipped more pumps worldwide in the first half of 2019 compared to all four quarters of last year combined. We are also beginning to see greater evidence that we are making progress in our longer term goal to bring the benefits of pump therapy to more people with diabetes.

Historically, we estimated about 30% of the 1.6 million people with Type 1 in the United States use an insulin pump and that between 25,000 to 30,000 people convert each year from using multiple daily injections. Even with the strength we saw this quarter and continue to have about how our new customers report converting from MDI. This trend combined with other pump manufacturer results and third-party data suggests that the number of people adopting pump therapy for the first time could be doubled what it has been in the past.

We felt like there is a building momentum shift in the insulin pump market over the last 18 months, and we are now beginning to see the days for it. To us this demonstrates that technology combined with ease of use drives adoption. We’ve scaled very quickly to meet the growing demands of the t:slim X2 pump. This took tremendous cross functional effort throughout the organization and we are working to ensure organizational readiness for our continued growth. There are few parts of the organization in particular, where I’d like to highlight some of the recent scalability efforts, which include activities with our field sales and clinical team, our insurance verification and sales support teams as well as our customer technical service group and manufacturing.

Starting with our sales in clinical field organizations. We’ve had about 74 territories since 2016. During this time, we’ve opportunistically added sales reps and additional clinical educators based on demand. Following the positive momentum of our Basal-IQ launch, we’ve recognized the need for a modest expansion and have become hiring in select regions. By the end of 2019, we anticipate being closer to 80 territories.

Our internal sales support and customer support teams have also needed to increase to support our growing installed base. As a reminder, we directly support our U.S. and Canadian customers while our international distribution partners support our customers in other countries. The ease of use of our technology has been a big factor in allowing us to manage growth in these organizations. And we’ve also been investing in solutions that allow us to grow our sales faster than the support resources.

That being said, we have invested and will continue to invest in these groups as part of our mission to deliver revolutionary customer service. In support of this effort, we have decided to start building up a parallel facility in Boise, Idaho that will be dedicated to supporting many of the positions that scale with our customer base such as customer technical support and insurance verification. These departments will continue to operate as part of our headquarters in San Diego as well that rather than continuing to expand locally will be focusing on hiring efforts in new positions in these groups in Boise.

We’ve established an amazing culture here at Tandem that we’re looking to continue on our Boise site and are thrilled that a number of our existing employees have already voiced interest and moving to Boise to help this effort. In addition to our customer facing roles, we’ve also been concentrating on scalability of our operational groups, manufacturing has been our primary focus. I was pleased that we were able to catch up on a previously unfilled international demand this quarter. As we have shared previously, we ordered three additional t:slim cartridge lines earlier this year and made improvements in the automation to increase capacity. In addition, we have ordered our first t:sport cartridge manufacturing line in preparation for launch later next year.

For the long-term, we continue to carefully weigh the choice of expanding our manufacturing operations further or outsourcing certain aspects to experience third parties. I believe our scalability efforts across the organization are particularly important this year as worldwide demand for our t:slim X2 is continuing to increase, as we expanded internationally and plan for new product launches. Of course, the next new pump, the team is preparing to launch is the t:slim X2 with Control-IQ technology. It’s especially exciting as we believe when we launch the system it will be the most advanced automation insulin offering in the world.

As a reminder, this system utilizes the t:slim X2 pump embeds our implementation of the algorithm technology we licensed from TypeZero, and uses glucose values from the Dexcom G6 CGM sensor. In addition to adjusting Basal insulin to minimize hyper and hypoglycemia, and improving on user time spent in a targeted glycemic range, it’s also designed to automate correction boluses.

As we previously shared several data from the t:slim X2 with Control-IQ was presented at the June American Diabetes Association Scientific Sessions. It was a [winning] [ph] conference as the data was generated in the NIH-funded DCLP3 arm of the IDCL trial and was a two scientific study that compared the performance of our system to a control group, something that’s not been done by our competitors in the past. It’s been described as the most comprehensive study in diabetes technology in years, when you consider the size or [animation] [ph] with a control arm minimal exclusion criteria 20% percent MDI participation and duration.

The results are very positive, all primary and secondary outcomes are met with statistical significance. Time in range was 71% representing an 11 percentage point improvement from the control group. The participants had a wide range of A1Cs and each group improved significantly. The system remained in a closed-loop mode 92% of the entire six month period and the quality of life metrics were outstanding, all at 4.5 or greater on a scale of one to five.

In scientific studies, the nuance of data actually becomes very important. It’s why study results can’t be compared directly, particularly between scientific studies and marketing studies. An element of the study that is indisputable though and continues to amaze me along with our investigators and other key opinion leaders is that 100% of the 168 participants remained in the study for the full six month duration.

With this combined with the overwhelmingly positive anecdotal feedback, it’s not surprising that the vast majority of study participants had opted to continue to use a Control-IQ system through the extensions based study. We received the full dataset in July and it has now been submitted to the FDA for review. As a reminder, the regulatory submission is focused on the algorithm or alternate controller as the t:slim X2 was approved as the industries first alternate controller enabled insulin pump earlier this year.

Based on this timing, we continue to repair for a commercial launch of the t:slim X2 with Control-IQ in the fourth quarter pending FDA approval. We take that our initial launch will be for people of age 14 and older based on the age group of the participants in the DCLP3 study. As a reminder, we are funding a separate trial, the DCLP5 study to lower Control-IQs age indication to age six and above and enrollment for the study is underway and approximately half of the anticipated [participant] [ph] have now been enrolled.

Based on this timing, we plan to file our regulatory submission to the FDA to over Control-IQs age indication after the New Year. Strategically what’s most important is receiving pediatric approval in advance of the kids summer camp season, which is a significant educational and marketing opportunity. As we have discussed previously, Control-IQ was designed to be offered to our t:slim X2 customers as a software update.

We are uniquely positioned to offer this capability to day through our Tandem device Updater, and have historically provided a software updates, including integration with Dexcom’s G5 sensor and our Basal-IQ algorithm for no additional cost. Whether or not we will charge for Control-IQ has been a broad topic of discussion within Tandem. We believe there is great value to our Control-IQ algorithm, but have also given great thought to our commitment to help simplify diabetes management and improve the lives of people with diabetes.

As a result, we have decided that all new software or feature updates for the t:slim X2 pump approved by the FDA before the end of 2020 will be available to our in-warranty U.S. customers at the no cost download. This offer will be available to our customers, who purchase the t:slim X2 pump before the end of 2020. Additional details are available in a separate press release issued today, because our international launch plans vary by country, our pricing outside the United States is still under evaluation.

As you can see Animas firing on all cylinders and our momentum is strong as we enter the back half of this year. If we talk to our employees, there’s a lot of excitement about what we are delivering today, but even more about what’s to come as our opportunity to improve hundreds of thousands of more lives is tremendous. To all of our employees, thank you. You are driving Tandem’s incredible success, which is reflected in our 2Q results.

To help provide some additional color on our positive momentum, I’ve asked Brian Hanson to join us today to provide his perspective directly. Many of you have met Brian, anyone who is not Brian has successfully led our commercial organization since 2016, under his leadership our commercial team banded together during challenging times, maintains our core values, and is now propelling this tremendous growth, while we are preparing for the future. In the past year, Brian, has also been fundamental in leading our expansion outside of the United States.

I’d now like to turn the call over to Brian to share his perspective on what we’re experiencing worldwide.

Brian Hansen

Thanks, John. One incredible time to be part of Tandem, say, things are busy is an understatement, but the positive feedback we continue to receive from patients is quite motivational. Working to understand a perspective of our customers, our healthcare providers and the broader diabetes community is and always has been a pillar of our company. Market research and behavioral scientist are central in our decision making processes and recently more than 10,000 Tandem customers responded to our survey focused on satisfaction.

Additionally, we recently received new insulin pump survey data for dQ&A and independent research group. The results between the two surveys were remarkably consistent and highlighted that our customers are very satisfied with the t:slim X2. In fact, our survey showed the highest satisfaction scores in the company’s history. And dQ&A’s data showed the Tandems’ customers are the most satisfied amongst the pump manufacturers.

We also rank as having the highest satisfaction for our patient support services among pump manufacturers. We received positive ratings in our own survey as well with our growing customer base, as John discussed, it’s an area we are continuing best in as a service we offer is just as important as the insulin pumps we sell.

And finally both surveys showed that we have a world-class net promoter score, and dQ&A highlighted the Tandem is the highest among pump manufacturers. For anyone not familiar with Net Promoter Scores, it’s a customer satisfaction benchmark that measures how likely your customers are to recommend you to a friend is intended to measures, a customer’s overall sentiment about a brand versus their perception of a singular interaction or purchase.

NPS is becoming an increasingly popular measure, particularly with payors and Tandem’s excellent NPS scores are helpful in our ongoing discussions with these important business partners. In addition to survey data, we continue to hear positive anecdotal feedback about the ease of use of the Tandem t:slim X2, our Tandem Device Updater and our Basal-IQ technology. These factors combined with our service is what I believe is driving the growth and penetration of the insulin pump market and as what is positioning Tandem as a leader in both.

Basal-IQ in particular is benefiting us in three ways with healthcare providers that we did not experience historically. First, having an automated insulin delivery feature is opening doors for us in offices who previously did not prescribe Tandem pumps. Second, as individuals go back for follow-up appointments with their healthcare providers, it’s common to see improved outcomes as well as a higher level of patient engagement. Third, Basal-IQ was demonstrated in healthcare providers that innovations like automated insulin delivery does not have to be a burden on their office. Basal-IQ’s ease of training is a factor we regularly received positive feedback on and we believe it is contributing to its rapid adoption.

As we look at the profile of our new customers, as John mentioned, we are thrilled to see that about half report being new to pump therapy. Of the conversions, people switching from Medtronic make up the greatest percentage followed by those coming from Animas. Our t:slim X2 offering has been highly attractive Animas customers since their announcement to exit the market almost two years ago. We don’t have good visibility to how many Animas customers remain, but we believe the vast majority of analysts customers have already selected a new insulin pump.

As a reminder, Animas has stated that supplies and support for their pumps will no longer be available after September 30 of this year. That being said since people typically purchase pumps supplies every 90 days, we anticipate that we’ll continue to see Animas conversion in the United States throughout the second half of this year, and to some extent in the first part of next year. Beyond that, we may see former Animas customers, who are not yet eligible for insurance reimbursement and therefore opted to take a Medtronic pump at no cost, but plan to move to a Tandem pump following in their warranty expiration date.

Outside the United States, our international sales efforts were jumpstarted by analysis exit from the pump business, and the majority of our U.S. sales this year can be attributed to Animas conversions. Converting Animas customers has been the priority for our distribution partners, but we’re seeing a solid organic demand and now that this can be their primary focus we are excited for its potential. In addition, our marketing the features and benefits t:slim X2 offers today, we’re also broadly launching Basal-IQ and our Tandem Device Updater outside the United States in the second half of this year. In fact, I’m happy to shared that in June, we officially launched Basal-IQ in our first couple of countries.

The timing for availability in different countries varies by geography, and is a decision we make in consultation with our distribution partners and also depends on different regulatory and reimbursement requirements. Having Basal-IQ to market internationally will be a growth driver as we look to 2020. In addition, we are working on entering select countries with developed insulin pump therapy markets, where we did not launch in our first phase of expansion, but now have identified partners that we expect can also contribute to our growth outside the United States.

Domestically, we believe Basal-IQ will continue to drive our growth in the upcoming months, in addition to our increasing number of customers, who are eligible under their insurance plans to be reimbursed for a Tandem insulin pump once again and of course are upcoming Control-IQ launch. The no cost software update offering that John described for t:slim X2 customers is likely to even out pent-up demand that we may have experienced otherwise in advance of our Control-IQ launch if we did not have the Tandem Device Updater. Since Control-IQ has not approved, we’ve not yet commenced any marketing efforts, but there is an excitement building for this product and we’re very excited to deliver.

With that, I will now turn the call over to Leigh.

Leigh Vosseller

Thank you, Brian, and good afternoon, everyone. Q2 exceeded all expectations marking the seventh straight quarter of greater than 55% year-over-year sales growth and the fourth straight quarter greater than 70%. As you saw in today’s press release, we have increased our worldwide sales guidance again to a range of $350 million to $365 million, which includes an increase in our international sales guidance range to $55 million to $60 million. We shipped 21,300 pumps worldwide, which is a nearly 300% year-over-year increase, resulting in $93 million in sales.

Our international expansion played a key role in this remarkable achievement as well as benefit from the same domestic growth drivers we have seen since late 2017, which include renewals, new pump sales from MDI users and competitor conversion. As John and Brian discussed, the U.S. market appears to be growing at an unprecedented pace. Our U.S. sales alone were $70 million in the second quarter, of which pump sales comprised 69%. This was driven primarily by 12,800 pump shipments, which were 135% higher than the second quarter of last year. This also represents a 32% increase sequentially by comparison our second quarter sequential increase in 2017 and 2018 averaged only 22%.

We estimate that our domestic in-warranty installed base now exceeds 96,000 based on the cumulative number of pump shipped in the last four years. U.S. pump shipments once again reflected the doubling of renewals year-over-year to approximately 1,600, which includes sales from warranties expiring as far back as 2016. We continue to be pleased with our progress related to customer retention and renewal. Looking forward, renewals will continue to be a strong growth driver as the opportunities from warranty explorations continue to accelerate and we launch new innovation.

As we think about our progress for the year-to-date we continue to see equal strength from all of the growth drivers. Outside of the renewal population, MDI conversions remain strong, our competitor conversions have kept paced. Animas’ contribution continues to make up nearly 18% of our non-renewal shipments and we believe there is a high likelihood that this will continue through the end of the year as the remaining Animas population works through their transition.

As a result of our progress in the first half of the year, and with what we saw in July, we are increasing our domestic sales expectations to a range of $295 million to $305 million from our first quarter range of $255 million to $265 million. We continue to anticipate typical domestic seasonality across the third and fourth quarters due to insurance deductibles dynamics.

Outside the U.S., our sales in the second quarter were $23 million, of which pump sales comprised 74%. We shipped 8,500 pumps, bringing us to 13,500 pumps on a year-to-date basis and nearly 18,000 since inception. The first half of 2019 benefited by approximately $7 million from the fulfillment of the remaining 2018 commitments. As a reminder, we were unable to fulfill all of the international pump demand in 2018 due to supplier constraints for a particular component parts, by the end of the second quarter, we fully resolved the situation.

We are increasing our international sales guidance for 2019 to a range of $55 million to $60 million based on our expectation for continued market penetration in existing geographies. With a rapid uptake in the worldwide installed base, which we estimate to be approximately 114,000 customers based on who purchased the pump in the last four years, our supply sales grew 113% year-over-year consistent with the first quarter infusion set sales were 20% of total sales followed by cartridge sales at 10%.

With increasing sales and higher manufacturing volumes, gross margin continues to be favorably impacted. Our gross margin was 54% in the second quarter compared to 44% in the second quarter of 2018. This improvement is the result of a combination of factors products sales mix heavily weighted to pumps, a reduction in overhead rate per unit and continuous benefit from process efficiencies. Pumps have the highest gross margin profile and therefore with the greatest contributor to our gross margin expansion. Gross margin also increased sequentially from 51% in the first quarter. We anticipate that our gross margin will continue to progress through this year based on typical pump sales seasonality in the U.S. and growth in manufacturing volumes.

With the higher sales expectations for 2019, we have significantly ramped up production to increase inventory level. In various process improvements in cartridge manufacturing, we have increased our output on existing equipment from a run rate of 12 million units annually to 14 million units. The 3 new cartridge manufacturing lines we ordered earlier this year will also add capacity for 15 million additional units on an annual basis.

We are increasing our gross margin expectation for the full year to approximately 54%, keeping in mind that we make experience pressure from other factors such as geographical mix and variability in non-cash stock-based compensation. Beyond gross margin, we continue to demonstrate leverage in operating expenses by achieving adjusted EBITA of 13%, which excludes the impact of non-cash stock-based compensation. This was our third quarter in a row of positive adjusted EBITDA. We continue to make investments to thoughtfully skill the business for the record setting sales growth we are experiencing, including additional customer support personnel for the installed-base, execution of R&D objectives and facilities expansion. Our 173% sales growth year-over-year or outpaced the increase in operating expenses.

Operating expenses were $52 million in the quarter, including $11 million in non-cash stock-based compensation, which compared to operating expenses of $29 million in the prior year, including only $3 million in stock compensation. Our total cash and investments increased to $131 million at the end of the second quarter from $126 million at the end of Q1 and $129 million at the end of the year. This includes $8 million year-to-date in our capital investments for the beginning of both facilities and manufacturing capacity expansion, which is a substantial increase that we spent only $3 million in August 2018.

These investments were more than offset by $11 million generated from employee stock benefit plans. We now anticipate being cash flow positive on a full year basis, despite an estimate of capital expenditures reaching $20 million.

To summarize our 2019 outlook. Our financial guidance is for worldwide sales in a range of $350 million to $365 million, including international sales of $55 million to $60 million. We expect gross margin for the year to average 54%, and we expect adjusted EBITDA in the range of 5% to 10%. Our non-cash charges for stock compensation, depreciation and amortization are expected to be approximately $60 million included as components of both cost of sales and operating expense.

Looking beyond 2019, our longer term goals primarily related to product adoption driven by our portfolio of innovative products, managed care and profitability. The five year goal we laid out at our Analyst Day to reach a worldwide installed base that 255,000 seemed a very ambitious less than one year ago. As Kim mentioned earlier, this is now accelerated our expectation to reach that installed base milestone earlier than estimated, primarily because of the stronger than anticipated demand for Basal-IQ.

We’re going to wait to see the remainder of the year, especially with the upcoming launch of Control-IQ to provide an updated longer term installed base goal, driving managed care acceptance is another longer term top-line initiative. For the first time, we are able to engage in clinical discussions with insurance payors, which is instrumental and driving our managed care strategy. Accordingly, a priority for our organization is to transition more business to the direct channel from approximately 25% of our business today to 50% over the longer term. Additionally, we would like to explore partnerships with payors through value based arrangements, where we can both share and the positive outcomes that the use of our system can drive, particularly based on the benefits we expect to see from Control-IQ.

In addition to driving the top-line and achieving above industry sales growth, we continue to focus on profitability. We have made significant gross margin progress for the past few years through capacity utilization by implementing efficiencies into product familiarity, reducing material costs, improving product reliability and launching our t:lock infusion set. We believe long-term success will be defined by achieving a gross margin of at least 60% and that this may be accomplished to further capacity utilization and the potential incorporation of contract manufacturing by driving managed care initiatives and also focusing on cost reduction in future product generation such as t:sport.

By combining these gross margin improvements with the investments we are making today and our other scalability initiatives, as John described, we remain confident and achieving our long-term operating margin objective of at least 25%.

With that, I will turn it over to the operator for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Joe Wuensch from BMO Capital. Your question, please?

Joanne Wuensch

Thank you very much for taking the question. And just a nice quarter would really be an understatement. Two questions really, the Control-IQ data at ADA created a little bit of confusion at least among some investors that we spoke with. Can you give us a little bit of the physician feedback that you’ve been hearing after the ADA meeting?

John Sheridan

Sure. Hi, Joanne. First of all, I just want to say that we are very pleased with the results. There is definitely a divergence of opinion between KOLs and academics, and what we describe as our initial expectations. But I think it’s really important to say that you can’t really compare results of different trials, that’s something that’s really important. I would say that the KOLs and academics are extremely pleased with the data. And they have said that to us over and over again, I mean, we met the primary, secondary outcomes.

The improvement was immediate and it was maintained for the entire six months. We had 92% time in closed-loop, in the quality of life metrics over the top. And I would say that the most important element of that study was the fact that, when you look at the stratification of time in range versus A1C. There was a very wide range of A1Cs from 5.5 to 10.5 and every group improved. That was a really, really big deal. And so – I think that we’re extremely satisfied and excited, and I think this is going to be a great product as soon as it comes to market.

Joanne Wuensch

Thank you. And my follow-up is, as you think about and bringing that product to market, you’ve commented earlier they haven’t really become the long-term marketing plans. What does it take to launch it and not just in terms of mechanics of getting the brochure put together, but also on the expense side? Thank you.

John Sheridan

I think that we are absolutely working in a large cross functional team to make sure that, we’re preparing ourselves for the launch. So I think, what Brian was referring to us, we can’t say this publicly, we can’t really talk about what we’re doing. But we’re definitely working to make this happen. I think that other than the obvious – other than – like you suggested the manuals and things like that. The one thing that we’re preparing to do is a little bit different, as we are working to aggressively train – the health care providers in the few weeks that’s follow the release.

We believe that this is – there are differences in the Control-IQ system that require us to provide training that are important. And so we plan to do that in the two to three weeks that follow the release. And I think that’s the one big deal probably that’s been different from what we’ve done in the past.

Leigh Vosseller

And Joe, answer your question on the expenses, we don’t anticipate any outsize expenses in the quarter associated with the launch.

Joanne Wuensch

Thank you.

Operator

Thank you. Our next question comes from the line of Alex Nowak from Craig-Hallum Capital. Your question, please.

Alexander Nowak

Good afternoon, everyone. I congrats on the results. John, just going back to what you said on MDI, the number of MDI users switching the pumps have certainly accelerated here over the last 18 months? How should we expect this trend to morph over the next two to three years, because obviously there’s a lot of room still up to go 30% of diabetics using a pump? But are you getting what we would call the low hanging fruit, MDI users right now? Or is this acceleration across the board in a trend that you continue for the next couple years?

John Sheridan

Well, I don’t think we have the ability to characterize sort of the types of MDI users that are coming. But I will say that if you look at – just look at the second quarter data there was approximately 12,300 – 12,000 domestic pump sales, and you take out the renewals and that gets down to about, I mean, 5,500 MDI users. And so we basically just annualized that and they take into account seasonality. That by itself is up in 22,000 to 25,000 units per year, which is typically what happened annually for the whole industry. So you also have to take into account are Medtronic and you’ve got to take into account insulin others. So it really seems like there’s acceleration in interest that we are successfully improving market penetration. And I believe this technology, I think is the technology and ease of use is driving adoption.

Alexander Nowak

Okay. Understood. And then just any update with your conversations with UnitedHealth Group, particularly after the ADA conference?

Leigh Vosseller

So – thanks, Alex. I really put UnitedHealth Care in the bucket with all of the major payors. It’s been really great to have the Basal-IQ data, and now with some real world data to support it. And now with the Control-IQ data, we can continue in these very engaging conversations, which I think going to be helpful in the long-term as we try to achieve our managed care objectives. So things are progressing well with all the payors.

Alexander Nowak

Okay. Understood. Thank you.

Operator

Thank you. Our next question comes from the line of Brooks O’Neil from Lake Street Capital. Your question, please?

Brooks O’Neil

So good afternoon, congratulations on everything. It’s fantastic. So…

John Sheridan

Thanks, Brooks.

Brooks O’Neil

It works me – I’m curious if there’s any significant difference between Basal-IQ and in Control that would preclude somebody who wanted the in control algorithm from buying Basal-IQ right now, and just getting the software update when it’s approved by the FDA?

John Sheridan

Well, I think that the – right now, the way we plan to do this, there are going to be pumps in the marketplace that have Basal-IQ on them, when Control-IQ is available they will be able to upload their pumps with Control-IQ at for no charge as long as the pump is in warranty, it’s purchased before the end of 2020. So that’s what our plan and I think that this is important, we think this is going to – it’s going to drive uptake of the device. We’re very sensitive to people, who have diabetes and we think it’s a very important decision, and this is the right decision for us.

Brooks O’Neil

I think, it’s a great decision – it’s maybe. I have just one other question for Leigh, and it’s a little bit technical and you probably know I’m not an accountant, so if I get in over my head and I apologize in advance. But I saw, I think, you commented that there was $0.4 million of expense related to the warrants. And I was curious what the total amount of non-cash warrant expense, you anticipate for the full year, so we can make sure we have our models correct?

Leigh Vosseller

I’m sure. And Brooks, you’re correct. It was $0.4 million in the second quarter and $13 million in the first quarter. It’s a very difficult thing to model, because it solely relies on the stock price movement, so at the end of each quarter we read value those warrants, and so again difficult to estimate our forecast. We have about $400,000 of them left there is only people continued to exercise and it will reduce the exposure in the future.

Brooks O’Neil

Sure. That’s great. Thank you very much and congratulations.

Leigh Vosseller

Thank you.

Operator

Thank you. Our next question comes from the line of J.P. McKim from Piper Jaffray. Your question, please?

J.P. McKim

Hi, good afternoon. Congratulations on the quarter. I wanted to ask one for Brian on the international side. Can you help us understand, you talked about organic demand there? And I mean, how do we parse out maybe the numbers with Tandem and with organic, and then get to some of these new countries that you’re kind of excited about opening up as kind of new territories?

Brian Hansen

Hi, thanks for the question. So that first phase one was going into well established territories that had the distribution partners that worked with Animas, and our primary focus there was getting those Animas patients they had converted over to the Tandem pump. We’ve been surprising some of those markets and clearly in the 12 countries, they all vary a little bit, but we’ve been surprised at the demand on the organic side of those looking for a new pump, so either patients that are new to pump therapy or patients that have had their pump for four years and are ready to select the new one.

Now that the Animas patients are rapidly getting to the end of that conversion period here at the end of September of this year, all their efforts can go towards getting new ones on and again that demand has been very positive for us. So we think that’s what feels the second half of this year and into 2020. And then as we look at some other markets where there wasn’t distribution partners for us to select, they were more direct type countries, those have well characterized pump markets, Germany is a good example. And those are areas for us where we’re having final conversations, hopefully getting partners in place and drive some real good organic growth there. And there probably be a few Animas patients left over there, but they just didn’t have a distribution partner for us to jump on. So it’s been surprisingly strong and surprisingly positive, we’re really pretty strongly ingrained now in the international marketplace and all the meetings and what have you, so we think it will continue to be very good for us.

John Sheridan

J.P., I would just add that, Brian mentioned in the script that, we have begun to release Basal-IQ in all U.S. countries. And we think that’s going to have a significant uptake a more competitive offering against particularly Medtronic.

J.P. McKim

That’s helpful. And then, can you talk about upgrade and what you do either Basal or Control-IQ? Like, where are you – why are you in terms of your installed base being even on CGM like how many patients are on CGM? And is there any strategy or anything that you can partner with closely with Dexcom in terms of co-marketing or some sort of bundled offering to get everybody on CGM quicker?

Leigh Vosseller

I’m sure. I’ll start with the numbers, where we are today is about 50% of our customers have Basal-IQ enabled on their pump and about 70% or a little more actually have updatable pumps. So if they don’t have Basal-IQ today, people are able to access it whenever they’re ready or Control-IQ, when it comes about. And I’ll let Brian talk about the Dexcom collaboration.

Brian Hansen

Yeah. We have a great relationship with Dexcom and our counterparts, my counterparts specifically on the commercial side we work incredibly close together, I think there’s always opportunities to market with each other work we showed in the field and find those patients, who aren’t using CGM today and our algorithms, so they help driving that right now. So I see a very positive.

J.P. McKim

Thank you.

Operator

Thank you. Our next question comes from the line of Travis Steed from Bank of America. Your question, please?

Travis Steed

Hi, congratulations on another great quarter, and I appreciate the comments on the Animas business. Looking at the puts and takes, just clearly going to be some Animas next year, but a lot less than you have this year, I’m coming up with roughly $20 million to $25 million headwind. So – but still [just small] [ph] compared to the overall growth you’re seeing, it seems like [recent amount to you] [ph].

Leigh Vosseller

So when it comes to the Animas business, it’s really hard to understand how many people have actually made their decision, we think that we’re nearing the bulk of it that we think there will be a talent to next year. So I don’t know that’s really forecast what that amount will be. But I’d say that in terms of where our growth goes next year, we’re going to be watching Control-IQ at the end of this year and I think it’s going to be a significant driver that will continue to fuel Medtronic conversions as well as people coming from MDI.

Travis Steed

Okay. And on doubling the direct business in the U.S., maybe comment a little bit what does it take to do that and how should we think about the incremental margin or profit dollars for each patient versus distributor? And then one other, just comment on your share of MDI patients of the last few quarters?

Leigh Vosseller

So I’ll start with the last one, our MDI share has been about the same, we still continue to get about 50% of our patients from the MDI population. And when I think about moving from that 25% to 50% directly, it really just comes back to those conversations that we’re having with payors today. The ability to have this clinical data to get into those offices is making a huge difference in just getting to the table, and people have been very intrigued by the information that we’re providing it’s more than just a pump now it’s really a therapy for their patients. So that’s what’s going to help us move the needle on that direct business.

And then in terms of margin, we haven’t really discussed it, but that’s really – that is important to getting to our more than 60% long-term gross margin.

Travis Steed

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Mat Blackman from Stifel. Your question, please?

Matthew Blackman

Good afternoon, everyone. Maybe if I could start with John, maybe I missed this. But any sense on the timing of the full publication of the Control-IQ data. I’m just curious, what additional metrics might we see in that data that we didn’t see release that ADA?

John Sheridan

That’s good question. And I honestly can’t answer it accurately. I can say that the [indiscernible] have been submitted, I don’t even know the journals they’ve been submitted to. I would say that there are several things I do know that will be included; we’ll see a lot more quality of life metrics. There was only three or four mentioned in the data that was presented by Sue Brown at the ADA, I think a lot more quality of life metrics. And I think there will be significantly more detail on the nuance of each of the factors that were measured during the study – different this categorization looking at different groups, a lot more detail than that was presented there, it was pretty general what was shown at ADA.

Matthew Blackman

All right. That’s helpful. And then maybe just shifting to international, I want to follow-up and understand when you talk about the sort of organic opportunity that you’re seeing? When you say organic, are you talking about taking from competitors other than Animas? Or are you defining that as MDI conversion or some combination of both?

Brian Hansen

This is Brian. Yeah, some combination of both for sure. And there’s other pump manufacturers outside the U.S. as well and there’s opportunities to pick up some additional pump share from those. So – but, yeah, I think those two are definitely the two main areas of growth outside of the Animas conversions.

Leigh Vosseller

And I would just add to that, if you think about the international markets in the U.S. where it’s been stuck at a penetration rate of about 30%, the international markets provide an even bigger opportunity where it’s been in the 10% to 20% range depending on the geography.

Matthew Blackman

And any sense of what the international pump market has been growing, if you compare that to me, what the U.S. market have been growing over the last several years?

Brian Hansen

I could greatly varies by geographies and some are much larger and better characterize, some are really early on. We’ve got a hodgepodge of those, if we look at the 12 countries we’ve entered.

Matthew Blackman

And I’m going to sneak one more, and I assume, when you’re going to target these next round of companies – of countries that you’d be going after the ones with more defined already established market opportunity. Is that correct?

Brian Hansen

Yeah. That would be correct.

John Sheridan

But they also need to have the Dexcom sensors.

Matthew Blackman

Yeah. Got it. All right. Thank you so much. I appreciate it.

Operator

Thank you. Our next question comes from the line of Ryan Blicker from Cowen. Your question, please?

Ryan Blicker

Hi, guys. Thanks for taking my questions. Starting with another couple Animas ones, I apologize, if I missed this. But first, can you confirm whether or not Animas represented the low-20% of U.S. new patient shipments similar to recent quarter. And then can you just talk about Animas within guidance? Why is international expected to decelerate so much in the second half with your launching Basal-IQ and opening new countries? And then within the U.S., are you assuming Animas conversions declined materially in Q4 or stay stable throughout 2019?

Leigh Vosseller

I’m sure. There was a lot. So I’m going to start with what I remember and you can help me if I missed some of it. But coming from the U.S. side related to Animas and the way we’re thinking about it is, yes, it has been just under around 80% of our nonrenewable shipments, pretty much since they announced their exit. And so we’ve been very happy with that uptake and I think that what we’ll see is that will continue to be at about that level through the end of the year. And then, I think, we’ll start detail as we go into 2020. But I think there will still be opportunities, because people might hold on to their pumps, they will stock up on supplies, and so it doesn’t just drop off like a cliff, then with the new products we have coming in the next two years, I think we can well overcome. What that might look like as it goes away from the business.

When we look at the international side of it, it’s a little bit different story there, so what we’ve seen so far really starting in the third quarter of last year through the second quarter of this year, is the compression of all this Animas business that has been waiting for us to come, people knew we were on our way, but we’re not ready to ship till the third quarter. And then, because the distributors were very motivated and they have the lift, they were able to convert those patients much more quickly. So we think it’s pretty much behind us in the international market and one thing to think about when you look at first half over second half it’s very important to remember we did come out of 2018 in a backlog situation. And so about $7 million of sales in the first half of the year really pertain to what we would have liked to have shipped in 2018. So when you put that in there, and then you go forward it’s a nice trend.

Ryan Blicker

Got it. Very helpful. And then the second one on gross margin, you mentioned the ability to reach gross margin of 60% over the long-term. How should we think about long-term, is that something that could be achieved in two to three years with the great performance you put up to date relative to your prior targets? Or should we think about it that is closer to maybe five years or beyond? Thank you.

Leigh Vosseller

It’s more in the five year beyond category. So we really do think about it in the longer-term. I think, something that we’re really focused on and number of the drivers would be the reimbursement opportunities as well as the introduction of t:sport into the market. And then in the international business depending on how much it becomes as a percent of our overall business.

John Sheridan

Does that answer your questions?

Ryan Blicker

It does. Thank you very much.

Operator

Thank you. Our next question comes from the line of Jeff Johnson from Baird. Your question, please?

Jeffrey Johnson

Thank you. Good afternoon, guys. Leigh, maybe I just want to go back I hate to ask all these Animas questions, but I just want to check one another thing on math? My math anyway from the added information you gave this quarter and I appreciate that additional information you’re providing. But it seems like Animas pump numbers in the U.S. have been about 2,000 pumps each of the last couple quarters. One, can I just check if that’s right, but more importantly then I back into a Medtronic or other competitive convert numbers that was almost 4,000 pumps this quarter in the U.S. Last quarter, I had backed into about a 2,000 number for that same kind of competitive ex-Animas convert.

So my question really is, are we seeing a big sequential increase in the competitive converts you feel like you’re winning outside of the Animas bolus, because that’s what it seems like in my numbers that seems like what we’re hearing in our checks with docs especially with Medtronic docs? But are you guys seeing truly seeing that in your numbers of that sequentially – sequential growth of competitive converts away from other pump companies?

Leigh Vosseller

We absolutely are here. You’re correct.

Jeffrey Johnson

Okay. In my numbers ballpark accurate?

Leigh Vosseller

Yes. So that 18% that we referenced has been pretty consistent bounces up and down a little bit, but pretty much since the fourth quarter of 2017, when they first announced their exit, we’ve seen about that level as a percent of our total of nonrenewal shipment.

Jeffrey Johnson

And you’ve been making a lot of comments here on the international, I’m trying to make sure we understand that obviously the first half year, especially with more Animas and some backlog and some other things that were helping that international number. So if the second half international is going to be – let’s say in line with your guidance $20 million to $25 million in the second half? Should that be are jumping off point, but then how we think about next year, the quarterly pacing of revenue? Or do we need to think about an even further step down there some of that Animas comes out there, I mean, obviously you have some good guys for next year as well.

So the $20 million to $25 million second half of this year can we build off that as we go forward into 2020? Or how do you think about that?

Leigh Vosseller

Yes. That’s a perfect way to look at the run rate and we’re really excited about getting days like go into those markets, because we will have a nice trajectory like we’ve seen in the U.S.

Jeffrey Johnson

Thank you.

Operator

Thank you. Our next question comes from the line of Steven Lichtman from Oppenheimer. Your question, please?

Steven Lichtman

Thank you. Congratulations, guys. I guess, just first, interesting to hear about some of the initiatives you’re looking at relative to managed care with the data you have in hand. Can you talk a little bit more about when we might hear more about that and you think we’ll see some in places you launch Control-IQ later this year?

Leigh Vosseller

It’s always hard to predict when those will come into play. I can say that we’re having engaging conversations that payors tend to move very slowly, some of them have their own cycles from when they will initiate new contracts, and some we’ll just do it based on when they’re ready. And so, I think, we will continue to see over time and we look forward to giving you information that we actually have more to share.

Steven Lichtman

Okay. Great. Thanks, Leigh. And then secondly based on the renewal number that you gave, it seems like the capture rate bumped up against sequentially. What was that number in terms of you capture rate and are you seeing signs that that will continue to build here in the coming quarters?

Leigh Vosseller

Actually we’re seeing nice steady progress with the renewables. I think the most difficult part is that people have to remember that we’re building off a small base from the early years of opportunities, and as we continue to progress the opportunities are growing at a very rapid pace. And so it’s hard to evaluate that capture rate particularly when you have people who two years out by their warranty expiration are still making that decision to purchase. But it’s moving along very nicely, and as we continue to the build the base of opportunities coming to the table, it will be a nice growth driver for us as well.

Steven Lichtman

Great. Thanks, Leigh.

Leigh Vosseller

Thank you.

Operator

Thank you. Our next question comes from the line of Matt Taylor from UBS. Your question, please?

Matthew Taylor

Hi, thank you for taking my question. I just wanted to ask a little bit about your decision to offer the Control download for free for folks here in the U.S. And how you thought about that and what that could mean for your decision to do that or not do that in some of these U.S. countries?

John Sheridan

Right. So we’ve been working on this decision for some time, it’s been pretty complicated. I think, just a sort of recap or we’re going to offer the no cost download to U.S. customers in warranty that [purchase upon] [ph] before the end of 2020. I think that we’re very sensitive to the impact that this decision had on our current pumpers as well as people who are considering Tandem. And I think that like Basal-IQ and Control-IQ is going to be a significant uptake. It’s going to have significant uptake. It’s going to reduce the burden and improve outcomes. And we want to do everything we can to make sure that we get – we maximize the uptake of this device – this product, I think that reducing the or eliminating the cost burden is significant going to do that. So we’re excited about it and we think it’s going to be a very substantial and successful product in 2020.

Matthew Taylor

And I apologize if I missed this. Have you given the number, the score recently on the conversion or percentage of your U.S. has Basal now?

Leigh Vosseller

Yeah. So we have approximately half of our customers have Basal-IQ enabled on their – from today, and a little more than 70% actually have an update of all time. So they would have ability to take a Basal-IQ, if they haven’t already or straight to Control-IQ, when it becomes available.

John Sheridan

Yeah, when you think about that, that’s a pretty tremendous opportunity basically 70% of our customer base today as the opportunity to update to a very substantially improved algorithm than what they currently have in their systems. It’s a big deal.

Matthew Taylor

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Ravi Misra from Berenberg Capital.

Ravi Misra

Hi, good evening. Can you hear me?

Leigh Vosseller

We can. Hi, Ravi.

Ravi Misra

Hey, great. Thanks for taking the question. So I wanted to ask, Brian, you’d comment on I think you mentioned earlier something about moving out demand. And I hope, you could give a little bit more color on that. And then I have a question on margins? Thanks.

Brian Hansen

So the demand from the perspective of having the Tandem Device Updater in our current pump version, right. There were a lot – yeah…

Ravi Misra

Yeah. I was wondering are you signally something about how the revenue cadence should be going over the next few quarters or just a little bit more detail on that commentary?

Brian Hansen

I think, it’s more of a comment of what would happen if we did not have the Tandem Device Updater with the announcement that Control-IQ data comes out that people start to hear, it’s potentially in review by the FDA and there’s some timeline, where that expectation may come then people pause, and don’t buy their next pump until that version comes that puts a company in a really odd position for a three, four, five, six month period, when the huge advantages of the Tandem Device Updaters those patients who buy the pump today know that especially there is no cost announcement here that they’re not going to be in a disadvantage position by getting it now matter of fact they somewhat jump to the frontline, because they simply take a quick online trading module, download the software, they’ve got Control-IQ.

So we just believe that with those capabilities that we have in the X2 pump. It’s smooth out the demand beautifully for us we don’t see that pause and therefore the cadence should continue to grow at the excitement of both Basal-IQ success and Control-IQs offering at some point here in hopefully Q4.

Ravi Misra

Great. Thanks. That was helpful. And then just on the market commentary and the market dynamics, John. I’d love to hear you’re kind of best at it where the U.S. pump market is growing for Type 1. We’ve thought historically this has been sort of high-single-digit maybe sounds like low-double-digit market, but given your tremendous kind of growth over the last few quarters. Do you see this as a market that’s potentially stabilizing for the next few years in the mid-teens or even higher?

John Sheridan

I don’t think it’s stabilizing at all, I mean, I think that the numbers that we’ve seen in the past have been sort of the low – mid- to low-single digits for the growth, I think, that’s really accelerating in our mind. It’s been the in the MDA – t he MDI conversions. The uptake in pump penetration has really been the thing that – as I think driving the uptake that we’re seeing right now.

Brian Hansen

Let’s say one of the things, technology was fairly static of the last 10 years or so, I mean there were new records. And with this software upgrade replacement model that we have rather than the old hardware replacement. We’re seeing a better, faster or more people as they’re getting rate control. So I think that’s what’s going to be saying, we’re all [indiscernible] up as – around 30% of Type 1, they’re using pumps. It’s just been a lot higher, looking at this quality of care and making insulin.

John Sheridan

And also say that just partnering with Dexcom and having the G6 connected to our system that’s a big deal as well. I think no fingersticks is a really significant improvement and reduction in the burden that people have to face every day.

Ravi Misra

Great. Thanks. And if I could just take one last question on the gross margin commentary on the guidance raise. Leigh, can you just help us understand how much of what that kind of stock based comp neutral gross margin would have been, because it looks like you brought up the stock-based comp guidance as well. So – of that 52 to 54 bridge what would have been if the SPC number was kind of equivalent to last quarter?

Leigh Vosseller

Sure. So the stock-based comp has been running between 1% and 2% of the – in the press margin, and I would expect that to continue through the end of the year. We did raise it significantly, but it’s going to be spread between operating expenses and cost of goods sold.

Ravi Misra

Great. Thanks. And then just from that perspective, how do we – is kind of the exit rate for 4Q, the way to think about next year? Thanks.

Leigh Vosseller

Yes. I think that’s reasonable for now.

Operator

Thank you. Our final question comes from the line Danielle Antalffy from SVB Leerink. Your question, please?

Danielle Antalffy

Hey, good afternoon, everyone. Thanks so much for taking the question. Congrats on a really good quarter.

John Sheridan

Thank you.

Leigh Vosseller

Thanks, Danielle.

Danielle Antalffy

Just really – yeah, no problem. Thank you, guys. Just refer to as to the puts and takes as it relates to guidance, I mean, you beat by about $25 million, $30 million, it looks like, my guess is $20 million, I can’t remember, by the way. And you’re raising guidance by $50 million at the point. So just obviously you have some level of confidence in that increased outlook for the second half of the year? And just wanted to get a little bit color from you on what the drivers of that increase level come as far is that the rate of renewal that you’re seeing is it a backlog of on Animas? Or are you seeing lower attrition rates like how – what gives you the confidence in the drivers of the back half outlook that’s also now higher?

Leigh Vosseller

Right. I guess, what the exciting at this time is that it comes from everything at this point, I mean, and this is how we started 2018 there were so many opportunities to grow the business. But there was a question of which ones would grow the best, which ones where we would be successful. And they all came to fruition, and we are continued to see that enthusiasm this year. We think Basal-IQ has been a big reason for that trajectory change, even into 2019 it’s been growing at a more rapid rate than last year. And so it’s based on what we’ve seen that first half that we think will continue through the end of the year.

Danielle Antalffy

Okay. That’s helpful. And as it relates to Control-IQ, should we be thinking about this a potentially driving a similar inflection albeit off of a larger base. But a similar inflection as we saw with Basal-IQ, is it that much of a step function improvement, obviously, the data is an improvement. But just curious how you guys are thinking about that, as it relates to – I’m not asking for 2020 guidance, but just conceptually how to think about it?

John Sheridan

I mean, obviously, it’s just there is just a speculation on our part. But I – we absolutely think it will be a strong product. We think that when you compare the overall performance, when you look at the results from this clinical study. We really have confidence, this is going to be a great product, but we have to wait and see.

Danielle Antalffy

All right. Thanks so much, guys.

Leigh Vosseller

Thank you.

Operator

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Executive Chairman, Kim Blickenstaff, for any further remarks.

Kim Blickenstaff

Thank you very much. We look forward to seeing everyone soon. We have quite a conference schedule coming up here in the fall. We’re hosting a number of bus tours in the upcoming weeks and we will be attending various conferences. We scheduled for September is the Baird Healthcare Conference in New York on September 4. There is the Dougherty & Company Conference in Minneapolis on the September 5. Morgan Stanley Healthcare Conference is on September 11 in New York, and then Lake Street Conference is on September 12 in New York as well. So thanks for joining us today. We had another big conference call getting close to 200 people. This is sort of a first for us. We really appreciate your interest and we’ll be seeing many of you in the coming months. Thank you for being on today.

Operator

Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

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